Italian banks, the BTp treasury is worth 2 billion in profits in 2019

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Almost 2 billion euros. This is the share of gross profits that the major Italian banks will realize in 2019 thanks to the coupons on Italian government bonds. Going from gross to net, the contribution of domestic «govies» is equal to 13% of the 10 billion net profits that the first 9 Italian banks will achieve overall in 2019. An average figure that takes into account some peaks: BancoBpm and Popolare Sondrio, for example, they will achieve 35-36% of net profit thanks to BTp. And Ubi Bancapot will also be able to account for about a quarter of annual profits (24%) thanks to sovereign bonds. The percentage contribution for the two big banks is more contained: 8% for the "very Italian" Intesa Sanpaolo and 10% for the "pan-European" UniCredit.

The estimates, which take into account the portfolio of government bonds in the belly of the banks in the current year, have been prepared by Giovanni Razzoli of Equita Sim. As you can see, the link between banks and BTp continues to be strong and decisive – in times of falling interest from lending – for the income statement of the major groups. For small unlisted banks, on which analysts' estimates do not exist, the phenomenon should be even more accentuated because – as the Forex Governor of the Bank of Italy Ignazio Visco reminded January – «less significant banks generally invest in Government bonds a higher share of assets ".

If the BTp contribution is still decisive for the profits of the banks, the reduction of the spread and the rise in prices due to the contraction of the "Italexit" risk must not be a pretext to hide the dangers of an excessive concentration of bank investments in securities sovereigns (often, almost exclusively Italian). According to Razzoli of Equita SIM, the exposure of the first nine Italian banks to the "domestic govies" is on average equal to 137% of the primary supervisory capital (Cet1). But even in this case the extreme peaks highlight concentrations of risk disproportionate to the Cet1: consider that Credito Valtellinese has an exposure to Italian government bonds which is equal to 364% of Cet1. E Mps, BancoBpm and Popolare Sondrio of 250%.

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The climate of "calm" on the markets is creating favorable conditions for the reduction of exposure. And in part is what is happening, with some banks that have taken to lightening their exposure to BTp in recent weeks. Looking at the failed contribution to profits, however, it seems difficult to think that the banks are depriving themselves too much of the interest deriving from government bonds. Despite the pressures of the Supervisory Authority which, in particular for the banks monitored directly by the ECB, requires a reduction of the sovereign risk as a prerequisite for the completion of the Banking Union and the single insurance of the deposits.